MONEYNEWS.com: 3 Ways to Avoid Toxic Financial Advice and Rash Decisions

MONEYNEWS.com
Saturday December 16, 2017
   
Home | Personal Finance
Tags: toxic | financial | advice | decisions

3 Ways to Avoid Toxic Financial Advice and Rash Decisions
Image: 3 Ways to Avoid Toxic Financial Advice and Rash Decisions
(Dollar Photo Club)

Friday, 15 Dec 2017 08:00 AM

Investors hear so much conflicting information and advice in the media these days that it’s perhaps easier than ever to become confused and make decisions based on emotion rather than on sound financial advice with a well-structured financial plan.

“With the growth of the internet, social media and TV, investors are constantly tempted to lose focus on what they can control and instead focus on things out of their control,” says Jason Labrum, founder and president of Labrum Wealth Management and author of the upcoming book Financial Detox: How to Steer Clear of Toxic Advice, Achieve Financial Independence and Manage Your Wealth for Maximum Impact.

High-strung investors fret over every dip in the stock market. They wonder who will win the next election and what that will mean to their investments. They hear about a crisis overseas or one here at home and ponder whether to abandon their carefully planned investment strategy based on the fear and uncertainty they feel as a result of the latest news reports.

Take a deep breath, Labrum says.

“You shouldn’t change what you’re doing just because of current events,” he says. “I often tell my clients, ‘I forbid you to freak out and stress out about the market. Turn off the news, turn off the TV and go enjoy the aspects of your life you work so hard for; family, friends and your passions.’ ”

To avoid getting caught up in the toxic atmosphere and advice created by a 24-hour news cycle, Labrum says the savvy investor needs to:

    Stay disciplined. The investment returns that the market delivers can be phenomenal if you stay focused, Labrum says. The problem: Investors react to media hype and make behavioral blunders based on emotional decisions rather than fact-based reality. “One key factor in investment success is learning how to maintain discipline and stick to the goal oriented financial and investment plan that is created for them,” he says.
    Know your volatility tolerance. It’s important to understand your tolerance for volatility when you’re building your portfolio. “Volatility is not necessarily risk; it’s an expected part of investing,” Labrum says. “However, your behavior can turn volatility into risk if you make decisions based on fear or panic.” If your goal is simply to save for retirement, and you would rather avoid the stress of watching market swings, then a strategy with a 5 percent volatility portfolio may be perfect, he says. If you have more ambitious goals (such as leaving money to heirs or giving to charity), and volatility doesn’t give you the jitters, then a higher percentage of volatility may be appropriate. The key is to find a balance that allows you to achieve your financial goals, but at a level of volatility you’re comfortable with.
    Listen to your adviser. People are prone to make emotional decisions with their investments. A good adviser, preferably a fiduciary adviser, should be able to help you avoid acting rashly and maintain the discipline you need to be a successful investor, Labrum says. The fiduciary adviser should be able to look at the situation without the impassioned bias you bring to it, and help you make sure you don’t panic and that you stick to your financial plan.

“Perhaps the most important thing is to educate yourself about finances and investing,” Labrum says. “You don’t have to know everything and you don’t have to do this all on your own, but you do have to know enough about the financial system to not get taken advantage of. That’s the only way to make smart choices that will make a real difference in your life.”

Related Stories:

    Is Your Financial Adviser Looking at Your Best Interests
    The Downside to Delivering Good Financial Advice

© 2017 Newsmax Finance. All rights reserved.
Click Here to comment on this article
Short URL|
Email Article|
Comment|
Contact|
Print|
    A   A
Copy Shortlink
Around The Web
Powered by Newsmax
Can This Man Save Your Retirement!?
US soldiers find controversial war relic (pic)
Do You Know Your Online Reputation? Enter Name
‘Banking Loophole’ Could Earn You Fast Money

RECOMMENDED

    Why Metformin Makes You Sick
    Anti-Aging Cream Nets Biggest Deal In TV Show
    Cardiologist Warns: Throw Out Your Probiotics Now
    Getting Rid Of Belly Fat: A Nutritional Guide
    40 Incredible Money-Saving Tips You Should Know About
    Trump Is #MAGA Rearming America. It's an Investing Opportunity!

Powered by
Join the Newsmax Community
Register To Comment Login To Comment
Please review Community Guidelines before posting a comment.

Newsmax Comment Policy

Keep discussions on topic, avoid personal attacks and threats of any kind. Links will not be permitted.
Join in the Discussion!
blog comments powered by Disqus

Free Newsmax E-Alerts
Email:
Country:
Zip Code:
Privacy: We never share your email.
Latest News Update
Get Newsmax TV At Home »


TAKE A LOOK

    The Jesus Question: Will He Ever Return?

    Prayer Changes Your Brain in 4 Simple Ways

    These 7 Things Activate Alzheimer's in Your Brain

    3 Signs You're Dangerously Close to a Heart Attack

    Arthritis Drugs Kill More People Than AIDS, Doctor Warns

    These 5 Things Activate Cancer In Your Body

Powered by
Take A Look At This

    Can This Man Save Your Retirement!?
    US soldiers find controversial war relic (pic)
    Do You Know Your Online Reputation? Enter Name
    ‘Banking Loophole’ Could Earn You Fast Money
    Recommended by Newsmax

Most Commented

    Reuters' Mark Miller: Republicans Sharpen Knives for Retirement Program Cuts
    Thursday, 07 Dec 2017 |
    41
    comments
    As a retiree collecting SS, I have some strong feelings about this. While...
    Larry Summers: Tax Cuts Won't Help Economy with 'Sugar High'
    Monday, 11 Dec 2017 |
    34
    comments
    You're a real idiot also....
    Rand Paul Says He Can't Add to $20 Trillion US Debt with Spending Bill
    Tuesday, 12 Dec 2017 |
    33
    comments
    I will let the experts find ways to balance the account ... but if they...
    Disney to Buy Fox Film, TV Businesses for $52.4 Billion in Stock
    Thursday, 14 Dec 2017 |
    23
    comments
    ALL media will soon be in the hands of the LIBERAL Left Wingers!...
    SEC Warns Investors of Cryptocurrencies, Halts Virtual Coin Offering
    Tuesday, 12 Dec 2017 |
    15
    comments
    ProbablyA currency not backed by any solid assets or the reputation of any...

    Home
    
    Street Talk
    
    Personal Finance
    
    Economy
    
    Companies
    
    Markets
    
    Investing & Analysis
    
    Insiders
    
    Money Wire
    
    Subscribe

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.
NEWSMAX.COM
MONEYNEWS.COM
© 2017 Newsmax Media, Inc.
All Rights Reserved
Contact | Advertise | Shop | RSS | Archives | Links | Careers | Privacy Policy | Terms & Conditions
.